Domestic Businesses: Hard to Find Footing at Home

 

Many enterprises scaled down sales and operations to survive in times of global economic crisis. Therefore, expanding the domestic market has been a decisive and important step. They almost forgot the home market until they saw export markets shrinking. Many enterprises spent much of time and money to attract domestic consumers. Nonetheless, there is no best method for enterprises to boost domestic sales.

 

According to economic specialist Le Dang Doanh, enterprises need to expand the local market in addition to exported ones. This is a growing potential market with more than 60 per cent of population aged under 30. “This market still has wide room. Enterprises need to see it as a long-term strategic market for many years. It should not be regarded as an alternative to export markets in the tough time,” Mr Doanh emphasized.

 

While Vietnamese enterprises are looking back to their home market, foreign commodities have long rooted. China and Thailand have dominated Vietnamese apparel, footwear and handbag markets. Remarkably, Chinese products are seen in any places like street shops, markets, supermarkets and fashion shops. According to economists, Chinese apparels are attractive to Vietnamese consumers because they gather “favourite features” like low price, quality and diversity. These are reasons why Vietnamese consumers want to wear Chinese clothes. Chinese goods are dominating the Vietnamese market.

 

Mr Doanh pointed out that enterprises could not take exported inventories to sell in the countryside. To grasp the market, Vietnamese must conduct serious studies on geo-economics and consumer culture. Many enterprises complained that they received a lot of priorities when they were exporters but they got almost nothing when they return home markets.

 

At present, enterprises are still facing up with counterfeiting by other local firms while they also do not have good distribution networks. Dr. Le Dang Doanh pointed out that commercial and industrial authorities are managing State-owned enterprises but they do not care much private enterprise system. To facilitate the penetration of Vietnamese enterprises into the domestic market, it is necessary to establish business assistance associations to protect the right and interest of member enterprises.

 

Vietnamese enterprises are struggling to conquer their home markets but most usually adopt traditional methods of discounting, promotion and distribution expansion. According to the Vietnam Retailers Association, some supermarkets are offering discounts like Big C, Co.opmart, Maximark, Citimart and Hapro.

 

Apart from introducing new, quality and cheap products, most supermarkets are offering many sales programmes to boost consumption. Ms Winnie Khor, deputy general director in charge of marketing, PepsiCo Vietnam, said low price is the target for many distributors.

 

To stimulate demand, producers, suppliers and distributors need to join hands together to launch sales promotion programmes and direct discounts and increase more winning awards for customers.

To encourage consumers to buy more, since late 2007, the Big C supermarket chain has joined hands with producers like Lix (detergent), Lien Thanh (fish sauce), Saigon Paper, Bai Bang Paper and S.G Fishco Foodstuff Company to sell cheap essential goods like detergent, papers, books, clothes, vegetable oil and Wow-trademarked fish sauce.

 

These items are as good as foreign ones while the price is some 20 per cent lower. Big C reported to have up to 150 Wow-trademarked products. To enjoy major discounts, Big C usually places orders for high volumes of goods.

 

Supermarkets are cooperating with procedures and processors to make new cheap products to stimulate consumer demand. To cut prices, Big C is applying the time to hang clothes on shelves, reduce clothe inventories from 25- 30 per cent to 10 – 20 per cent.

When a company expands or penetrates the domestic market, it means a company will lose market shares. They will have to compete for existence. Worse, purchasing power tends to decline. Additionally, consumers in rural areas self-make 50 per cent of woodwork for their use. The main rival against Truong Thanh Furniture Corp is small carpenter’s workshops which use unclear times to produce cheap products.

Moreover, the hardest difficulty is approaching consumers. Thus, Truong Thanh has established a force to boost sales in rural markets. The group is eyeing female customers (because women now have high income), apartments, resorts and hotels.

 

Nhat Tan Garment Company and Binh Tan Goods Manufacturing Pte. Ltd (Bita's) started their presence on the domestic market in 1992 and shifted to export markets in 1995. In 2007, the companies reduced exports and increased domestic market shares.

 

Both companies adopted the policy of expanding domestic markets while maintaining export markets with rational percentage. The company does not have a trademark because it produces at the request of foreign importers. Export-oriented production is highly unstable and dependent on customers. On the other hand, the company has a trademark in the domestic market while sales are more stable. However, it is very difficult, challenging and risky to conquer the domestic market as the company has to build distribution network, promote advertisement and apply discounts.